There are numerous moving parts of the oil equation, which make trading conditions volatile and even unpredictable at times. Just think of the geopolitical environment in the Near East or Ukraine. Trade disputes amongst economic juggernauts are another source of uncertainty and so are the incoming U.S. administration’s foreign and economic policies or OPEC’s management of the supply side of the market. In the current investment climate trading Energy futures could prove to be a risky exercise because unforeseen overnight or weekend developments could lead to wild price swings as has happened several times in the recent past.

Market players are quick to adapt to changing circumstances. It is conspicuous in the increased relevance of WTI options trading. The growing attraction of options, which can offer limited risk but unlimited upside potential, is particularly discernible in the impressive rise in open interest (OI) of WTI Weekly options, a tool designed to manage the short-term risk that can arise from events with ambiguous outcomes. As illustrated in the chart above, OI in WTI Weekly options is relentlessly climbing comparatively and in absolute terms – together with average daily volumes (ADV).

OI in WTI Weekly options rose just over 100% between October 2023 and October 2024, from 33,584 contracts to 67,483 contracts. During the same period, ADV increased from 16,829 lots to 31,949 lots, a growth of 90%. It is intriguing to observe that together with this ballooning interest in Weekly options, OI and ADV in WTI futures remain solid as they show a year-on-year increase of 1% and 8% respectively. Nonetheless, growing demand for WTI Weekly options clearly demonstrates that investors' appetite for tailor-made risk management instruments will remain healthy as long as unsettled, volatile and sometimes vicious trading conditions warrant it, which is widely expected to continue in the foreseeable future.